2003 (5) TMI 163 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of "Equalised Freight" in the assessable value for excise duty purposes.
2. Applicability of Rule 7 of the Central Excise Valuation Rules, 2000.
3. Interpretation of "Transaction Value" u/s 4 of the Central Excise Act, 1944.
4. Treatment of post-removal costs in the valuation of excisable goods.

Summary:

1. Inclusion of "Equalised Freight" in the Assessable Value:
The lower authority found that M/s. Apollo Tyres Ltd. charged a uniform amount as freight from customers, credited to an "Equalised Freight Account," and did not declare this as part of the transaction value. The authority concluded that the "uniform freight" charged and collected qualifies as "any amount the buyer is liable to pay the assessee" and should be included in the assessable value.

2. Applicability of Rule 7 of the Central Excise Valuation Rules, 2000:
The lower authority applied Rule 7, which states that the value shall be the normal transaction value of goods sold from depots. The normal transaction value is defined as the transaction value at which the greatest quantity of goods is sold. The authority held that the uniform freight should be included in the transaction value as per Rule 7.

3. Interpretation of "Transaction Value" u/s 4 of the Central Excise Act, 1944:
The revised Section 4(1) defines "transaction value" as the price actually paid or payable for the goods, including any amount the buyer is liable to pay in connection with the sale, but excluding excise duty, sales tax, and other taxes. The lower authority interpreted this to mean that all elements of cost incurred up to the sale should be included in the transaction value.

4. Treatment of Post-Removal Costs:
The Tribunal found that there is no provision in the substituted Section 4 analogous to the old Section 4(2), which allowed for the exclusion of transportation costs. The Tribunal referred to Board's instructions and Supreme Court rulings, which state that post-removal costs, such as transport charges, should not be included in the assessable value if shown separately. The Tribunal concluded that the lower authority ignored these binding instructions and Supreme Court decisions, which clearly state that post-removal costs cannot be added to the value for excise duty purposes.

Conclusion:
The Tribunal set aside the orders of the lower authorities and allowed the appeal, holding that the inclusion of "equalised freight" in the assessable value is not permissible as per the binding instructions and Supreme Court rulings.